YouTube pay channels get mixed reaction

13 May 2013

SAN BRUNO: YouTube, the online video site, is launching 50 pay channels in association with 30 content partners, with prices starting from 99 cents a month, in a move that has implications for advertisers, agencies and TV networks.

Viewers will be able to choose which channels they subscribe to, unlike the bundled model preferred by cable and satellite television, and the channels will decide themselves whether or not to show ads in their programming.

"YouTube shouldn't make the call whether a paid channel has ads or not," said Malik Ducard, YouTube's head of content partnerships. "The partners are smarter about their audience and their content than we are."

He added that YouTube was not attempting to compete with pay TV. "We think the two can coexist nicely," he stated.

The channels taking part in the pilot include Sesame Street, the children's program, Cars.TV, aimed at car enthusiasts, The Laugh Factory, a comedy channel, and UFC, a sports channel.

YouTube will keep around 45% of subscription revenue, with the rest going to the channel owners.

Reactions to the move were mixed. One channel creator said that many viewers were teenagers who would be unlikely to pay, while another observed that online video was about sharing which couldn't be done behind a paywall.

Agencies were more optimistic. "Advertisers should see this as a positive move, as they will be able to better target premium audiences against specific programs much in the same way as they do today with traditional TV," Nick Seckold head of digital at Mindshare Asia Pacific, told Campaign Asia-Pacific.

Lee Smith, CEO of platforms and president of Annalect for Omnicom Media Group Asia-Pacific, agreed. "Monetising vertical content via paid users is a viable next step," he said.

"At some point we'll have to get used to subscriptions for everything," Russ Crupnick, an analyst for NPD Group, told Billboard. "Otherwise, we really will live in a world where online entertainment means dancing cats."